Car sales expected to grow 3-5%

Car sales may make a slow recovery this fiscal after a poor run in 2012-13 where volumes fell for the first time in a decade, pulled down by poor economic activity and high interest rates. Society of Indian Automobile Manufacturers (Siam), the industry lobby group, forecasted a 3-5% growth in car sales in 2013-14 after a 7% decline last fiscal.
In 2002-03, car sales fell 2%. Last fiscal's fall was the sharpest since an 8% decline in 2000-01. Siam said buyers may return to the market this fiscal as there may be some improvement in economic growth and interest rates may also soften from their current highs. New models are expected to add incremental volumes in a year of low base. However, the industry body — that had to downgrade its forecast three times last fiscal — remains cautious.
Indications from the market also remain weak. Discounts have been at an all-time high and dealers are managing heavy inventory at a time when companies cut output in factories. Sales fell 22.5% in March.
Companies are nervous.  Companies say the market will remain difficult over the coming months too and any improvement can be expected only when RBI goes for a significant cut in key rates or the economy shows some concrete signs of improvement.